Shedding Some Light on Skill-Biased Technological Change

One of the ongoing trends in manufacturing is the continuing and increasing need for workers with more computer skills as manufacturing becomes more and more about machines making machines. This trend often confronts us in unexpected ways. One way it struck me was this morning as I was reading an article in the FT comparing LED lightbulbs to the long-known incandescent bulb.

To the consumer, there might not be much difference besides the initial cost and life-expectancy. But it turns out the the technology in the bulbs is radically different. Incandescent bulbs are relatively low-tech but making LEDs is more like making computers. As the FT explains:

LEDs are based on semiconductors and therefore do not require traditional lamp manufacturing expertise. This has opened opportunities for LED chipmakers such as Nichia of Japan and US-based Cree, as well as companies in the UK.

This means opportunities for new businesses, but also poses challenges for their current employees:

In the short term, this is eroding profits and triggering job cuts as manufacturing LEDs requires different skills and is less labour intensive than making traditional lamps.

Wolfgang Dehen, chief executive of Osram Licht, says job creation in future lighting technologies would only partially compensate for the change of the traditional businesses.

As the old educational slogan goes, one should never stop learning and should always stay up to date on the latest processes in one’s workplace. It’s fascinating how the larger trends in the economy can be reflected in something as generally ordinary as a lightbulb.

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